Kenyan Government Commits to Comprehensive Coffee Sector Reforms, Announces CS Chelugui

NAKURU – The Kenyan government has reaffirmed its commitment to implementing reforms in the coffee sector, focusing on eliminating cartels and boosting profitability. Cooperatives and Micro, Small and Medium Enterprises (MSME) Development Cabinet Secretary Simon Chelugui announced this during a meeting with coffee farmers in Nakuru.

According to Kenya News Agency, the Cooperatives Bill 2023, which has received Cabinet approval, and the Coffee Bill 2023, currently under Senate consideration, are central to revolutionizing the sector. He emphasized that the reforms aim to enhance institutional frameworks and governance structures in cooperatives, as well as mainstreaming agriculture. These changes are expected to curb the influence of private profiteers who have historically dominated the market, setting prices for farmers’ coffee at their discretion.

Chelugui warned farmers against coercion by those opposed to the reforms, urging support for government initiatives that promise to free them from exploitation and increase their coffee earnings. He highlighted that strengthening cooperative oversight will boost smallholder agriculture, the mainstay of millions of Kenyan households. The government is also promoting worker cooperatives, which can aggregate young professionals and artisans into viable economic units.

The Cooperatives Bill 2023 introduces the Inter-governmental Cooperatives Relations Technical Forum and strengthens the office of the Commissioner of Cooperatives. Chelugui asserted that these measures will reduce farmers’ dependency on profiteers controlling the coffee value chain.

Acknowledging the significant role of coffee in Kenya’s economic growth, Chelugui pointed out that the sector aligns with the Bottom-Up Economic Transformation Agenda (BETA). He noted the decline in Kenya’s global coffee export rank from 7th to 25th, resulting in reduced earnings and farmers abandoning the crop. The Kenya Kwanza administration, he said, is focused on addressing the challenges crippling the industry.

Under the new reforms, additional coffee cooperative unions have been licensed to sell directly at the Nairobi Coffee Exchange (NCE) and overseas, bypassing middlemen. The Coffee Bill seeks to reestablish the Coffee Board of Kenya and the Coffee Research Institute as independent farmer institutions. Chelugui disclosed a policy setting the minimum price for a kilogram of cherry at Sh80, part of the Guaranteed Minimum Returns (GMR) initiative, to be implemented across 37 coffee-growing counties. The Cherry Fund, administered by the New Kenya Planters Cooperative Union (KPCU), ensures prompt payment to farmers and offers protection against price fluctuations.

A report by the NCE shows that farmers earned over Sh24.8 billion from coffee sales last year, with cooperative societies and estates selling a significant portion of their produce through the NCE. The auction market has seen increased participation and sales, with notable earnings for NKPCU and Alliance Berries Limited.

Chelugui expressed confidence in the growing market and the farmers’ trust in the process, urging increased production to meet demand. He mentioned interest from Korean buyers and potential partnerships with major companies like Starbucks and C Dorman.

The Cabinet Secretary emphasized that NKPCU would collaborate closely with farmers to implement these reforms, focusing on increased production to capitalize on the growing opportunities in the coffee sector.